[Duke41]

I am a real estate broker and witnessed first hand how the mortgage crisis developed. The market price for housing was rising at a steady 20% clip from 2001-2005. The subprime lenders were coming up with programs to allow everyone and anyone to buy a home. There were two common scenarios first there were homebuyers with little or no down payment. They would typically get this 20/80 loans the idea there was to avoid PMI insurance, with a cheaper alternative and at the time PMI could not be deducted from you taxes as could the interest from each end of the 20/80 loan. The 80% loan was very close to the going rate at the time and the 20% loan was a few 3-5 points higher. The idea was to get into the home wait until the value rose enough for you to have 20% equity and then refi into a 30 yr fixed at a lower rate. There are two major flaws with this plan. First most of the 80% loans were variable rate locked for 3 years, second the home values did not increase as thought but actually decreased in value. So this has lead us to the current crisis were the loans have adjusted to higher rates and there is not enough equity in the home to refi out of the loan and into a better rate.

The other scenario was the folks were taking interest only loans so they could afford a larger or better house. The idea was to have low payments and then as you earned more money or got you financial house on order you could do a refi and be okay. Also folks brought property this way with the intent to flip the house after a year or two and make big bucks. Again the got caught in a declining market and can not refi into a better loan because they have no equity in their home.

I also heard about shady mortgage brokers and raw deals for uneducated buyers and in 2004 pulled my buyer out if a closing upon reviewing the HUD and noticing that the interest rate was 1 point higher and the closing costs were 50% higher than what was promised.

So where does this leave the folks in trouble. You have a few options. The first of which should be to call your bank and tell them you need to redo your loan. The banks will do, this I have helped folks so far with CITI Mortgage and Washington Mutual. The next choice would be a short sale.. that is a bank approved sale for less than whats owed the bank. I have done 6 of these since October. They are doable if your property and yourself hit the right criteria. Third you can let the place go into foreclosure, this is a tough decision as the banks will bury your credit rating. However if you were treated unfairly or there is any issue with your loan documents or with the HUD you have state agencies in MASS and RI that will get involved and help you get things straightened out.

If you or anyone you know needs some help with this PM me and I can point you in the right direction. Also Clammer is very experienced as well. Don't let the bastards get you down they act like they are holding all the cards.. trust me they aren't.